**Throwaway for the sheer audacity of the idea**
From what I’ve seen, a normal house + land project can easily be targeting something like 15–25% gross margin (IF developer is buys and builds today). [This is anecdotal from reversing numbers from public building companies (which are large) so take this with a pinch.]
If they land bank first, AND doesnt forward sell, the margins can get even better. this is because they supercharge on the value of the land going up.
That got me thinking about a different model: instead of selling 100% of the house outright, the developer and buyer both go on title. Upside to buyer is lower entry price. Upside to developer is margin locked for the sale in the future.
What developer would offer to buyer:
- Full transparency on landed cost price.
- Purchase the house at cost price
- No rental exposure (for the 20% developer owns)
- Full control on when they sell and who they sell to.
Buyer has to:
- Maintain 100% of the property outgoings (in return for no rent to developer)
- Be 80% owner on the title.
- Give 20% of the sale price back to the developer when selling.
Feels like a decent option for truly win - win. I’m curious if the market would actually want it.
This will only work for new builds or knock down rebuilds. The numbers may make sense AND we will be helping Dr Chalmers with his supply problem.
Theoretical numbers:
Project cost:
1 Hectare site 1 hr from city center could ~ 2 mill.
Planning approval and land clearing 500k.
== (2.5M)
Per house (400k) X 20 (500 sq m houses):
Foundations 100k
Walls: 100k
Roof: 100k
Interior:100k
== 8m
Total == 10.5m
For 20 houses comes to 525k per house.
You the owner gets 80% of the house for 525k. Perpetual right to live, no rental outgoing for the 20% you dont own.
Am I smoking too many winny blues?